Two Whirlwind Weeks That Changed News Corp. and Brooks

Rebekah Brooks leaves the Old Bailey after being cleared of charges of phone hacking, bribery and perverting the course of justice in London, on June 24, 2014. Brooks, 46, and six other defendants, including her husband Charlie, spent almost eight months on trial for alleged wrongdoing over a decade at the News of the World and another News Corp. tabloid, the Sun. Photographer: John Phillips/Getty Images

June 25 (Bloomberg) -- That fateful summer’s day, Rebekah
Brooks was at a fertility clinic in London with her cousin, who
was to be a surrogate mother for the News Corp. executive after
several failed attempts to have a child.

It was there, perhaps at her most vulnerable, on Monday
July 4, 2011, that Brooks found out the Guardian newspaper was
to publish allegations that journalists at the News of the World
had hacked the voice mail of a missing teenager, Milly Dowler,
who was later found murdered. Brooks had been editor of the News
Corp. Sunday tabloid at the time of the hacking in 2002.

That news story set in train events over two whirlwind
weeks that saw the closing of the 168-year-old weekly, Britain’s
biggest-selling newspaper, Brooks’s resignation as head of News
Corp.’s U.K. unit, police raids and arrests. News Corp. Chairman
Rupert Murdoch was forced to drop a bid for full control of
British Sky Broadcasting Group Plc. Yesterday, just under three
years later, Brooks was cleared by a London court of charges of
phone hacking, bribery and perverting the course of justice.

“First of all, I didn’t believe it,” Brooks said of the
moment she heard about the Guardian story during her testimony
at the trial. “Shock, horror, everything.”

Brooks, 46, and six other defendants, including her husband
Charlie, spent almost eight months on trial for alleged
wrongdoing over a decade at the News of the World and another
News Corp. tabloid, the Sun. Charlie Brooks and three others
were also cleared, while former News of the World editor Andy
Coulson was found guilty of hacking. The jury is still
considering further charges against Coulson and another
defendant.

Guardian Blamed

After the allegations first broke, Brooks laid the blame on
other media organizations and politicians in the opposition
Labour Party around former Prime Minister Gordon Brown,
according to an e-mail read out by prosecutors during the trial.

“This is a proper Guardian/BBC/old Labour hit,” she wrote
to the then editor of News Corp.’s Times newspaper, James
Harding, on Tuesday July 5.

Even as a public outcry gathered momentum, there were
messages of support -- from former U.K. Prime Minister Tony
Blair, CNN talk-show host Piers Morgan, a previous editor of the
News of the World, and Education Secretary Michael Gove.

“Let me know if there’s anything I can help you with,”
Blair wrote in a July 5 text message introduced by prosecutors
as evidence. “Thinking of you. I’ve been through things like
this.”

‘Brilliant’ Murdochs

“Thank you, I know what’s it’s like. GB pals getting their
own back. Rupert and James have been brilliant,” Brooks
replied, referring to Murdoch and his son. “Hopefully even in
this climate the truth will out.”

The week that followed saw regular exhortations from
Murdoch to Brooks not to give in to demands to resign until the
pair had met face-to-face.

Brooks received “horrific death threats” as a “sexist
witch hunt” ensued, she said during her testimony.

With pressure mounting on the government to delay a
decision on the proposed takeover of BSkyB, the U.K.’s biggest
pay-television broadcaster, Prime Minister David Cameron
announced July 6 there would be an inquiry into the hacking
scandal, which he called “absolutely disgusting.” Opposition
leader Ed Miliband joined the clamor for Brooks to step down.

Murdoch described the hacking revelations as “deplorable
and unacceptable” in a statement on Wednesday July 6, while
backing Brooks as head of the company’s U.K. unit, News
International.

Final Edition

The following day Brooks spoke to all News of the World
staff at a town-hall meeting, informing them that the coming
Sunday’s edition would be the last.

“The News of the World is in the business of holding
others to account,” James Murdoch, News Corp.’s deputy chief
operating officer, said in a statement to staff that day. “But
it failed when it came to itself.”

“He wanted to make sure I was looking after her and he
said ‘Please, do not let Rebekah resign,’” Carter said during
her testimony in March.

Against this frenetic backdrop, prosecutors said during the
trial, people close to Brooks began to put in place plans to
hide evidence from police. Between July 6 and July 9, Carter
conspired with Brooks to remove seven boxes of notebooks from
the News International archive, showing Brooks had something to
hide, they alleged. The pair denied the accusations.

Carter was cleared yesterday by the jury of obstructing
justice.

Plan B

With work under way on the final edition of the News of the
World, Brooks’s thoughts turned to the management of the
scandal, as seen in an e-mail sent to James Murdoch entitled
“Plan B.” That suggested that blame might be laid at the doors
of company executives including Les Hinton, the then chief
executive officer of News Corp.’s Dow Jones unit, and Colin
Myler, the newspaper’s final editor.

The “result of a report when published would slam Les,
Colin, etc. and vindicate my position (or not),” she said in
the e-mail sent at 7:16 a.m. on Friday July 8, which was
revealed by prosecutors.

“I am ring-fenced clearly and properly,” she said. “It
will be written as a slippery slope for me but I hardly have any
reputation left.”

Coulson Arrested

Away from the hubbub of News Corp.’s London offices, the
police investigation into phone hacking and corruption claimed
its first major scalp in the shape of Coulson.

The former News of the World editor, who went on to become
a media adviser to Cameron, was arrested July 8 and held at a
south London police station on suspicion of phone hacking and
making illegal payments to public officials. The newspaper’s
former royal reporter, Clive Goodman, was also arrested.

The jury is still considering bribery charges against
Coulson and Goodman.

On Saturday July 9, with Rupert Murdoch scheduled to fly to
the U.K. the next day and a meeting with James Murdoch penciled
in, Brooks’s mother arrived at her farm, Jubilee Barn near
Chipping Norton in Oxfordshire, to offer emotional support to
her daughter.

As the final issue of the News of the World was sent to the
presses, plans were put in place by the company to seal the
offices, remove desks and documents in order to co-operate with
the police probe.

Murdoch Meeting

On the morning of Sunday July 10, Brooks and her husband
traveled from their Oxfordshire home to James Murdoch’s house,
around a 25-minute journey, to discuss the handling of the furor
and the fate of the BSkyB bid.

The main event of the day, though, was a meeting with
Rupert Murdoch. From Oxfordshire, Brooks drove to London to see
him for the first time since the Dowler revelations became
public.

It was then that Brooks tendered her resignation, which
Murdoch refused to accept.

“It really was now time, with the closure of the News of
the World,” Brooks told the court. “I felt that it was
probably the right thing to do.”

Murdoch and Brooks appeared in the street outside his
Mayfair apartment, to be surrounded by photographers and
television crews. What was his priority now, Murdoch was asked.
“This one,” he said, gesturing at Brooks.

Blair Contact

A second exchange between Brooks and Blair, revealed by
prosecutors, began July 10. Blair opened with “Hi it’s Tony.”
They made arrangements to speak by phone the following day, with
Brooks replying: “Can’t wait xx.”

Brooks, by now exhausted, was ordered to stay away from the
office to rest. Even so, she spoke to Blair for about an hour on
Monday July 11, passing on her notes to James Murdoch in an e-mail that was read to jurors.

During the conversation, Blair offered to act as an
unofficial adviser to Brooks and the Murdochs, urging her to set
up an independent inquiry to probe the allegations.

“Keep strong and definitely sleeping pills,” Blair said,
according to the e-mail. “Need to have clear heads and remember
no rash short-term solutions as they only give you long-term
headaches.”

Bid Dropped

Culture Secretary Jeremy Hunt referred News Corp.’s offer
for BSkyB to U.K. antitrust regulators on July 11. Two days
later, the bid was abandoned as the Murdochs attempted to limit
the fallout from the hacking scandal.

Brooks finally resigned Friday July 15, saying in a
statement that she didn’t want to be the “focal point of the
debate” any longer. She was escorted from the company’s London
offices with nothing but her handbag, a soft case and her
disabled BlackBerry, Jane Viner, News International’s head of
facilities, said during the trial.

“I’m really sorry about it all,” Blair said in a text
July 15. “Call me if you need to. T x.”

On the same day, Hinton resigned as CEO of Dow Jones and
Rupert Murdoch met with the family of Milly Dowler to apologize,
while News International ran apology advertisements in all
British newspapers.

The police investigation was now closing in on Brooks.

‘Properly Terrified’

“Properly terrified,” Brooks said in a flurry of text
messages to Blair on Saturday July 16. “Police behaving so
badly.”

“Everyone panics in these situations and they will feel
they have their reputation to recover,” Blair replied.

Brooks was arrested on Sunday July 17 in a parking garage
below a police station in southeast London over phone-hacking
and bribery allegations.

“As I got out of the car, the police officer arrested me
there and then,” Brooks said as she testified in March. She
spent 12 1/2 hours in custody, declining to answer any questions
aside from providing police with a prepared statement.

While she was in custody Charlie Brooks and a security
detail put in motion a complex series of maneuvers to prevent
police, who were searching properties in London and Oxfordshire,
from finding laptops, prosecutors said during the trial. As
dramatic as prosecutors made the operation sound, jurors cleared
both Brookses, Carter and a News Corp. security guard of charges
related to obstruction of justice.

Charlie Brooks and a team of security guards exchanged a
series of texts and calls coordinating the return of a laptop
under the guise of delivering a pizza.

Trash Bins

“Broadsword calling Danny Boy. Pizza delivered and chicken
is in the pot,” read a text sent from one security guard to
another, referring to a line from the 1968 film “Where Eagles
Dare.” The scheme was frustrated when a cleaner found the
laptop in a bag behind trash bins and turned it in.

Charlie Brooks spent the rest of the day at the couple’s
London apartment waiting for news of his wife. He told the court
a friend, Chris Palmer, arrived and they drank wine before
ordering two pizzas.

“At that point we wanted a bit of blotting paper,” he
said. “We had drunk six bottles of red wine that night. I was
glued to Sky News. There was precious little information coming
out of the police station.”

When Brooks returned to the flat, she told the court, she
found her husband “several sheets to the wind.” Among the
hidden items, now missing, was Charlie’s “rather large porn
collection.”

In two short weeks, Rebekah Brooks’s world had spun out of
control from one of the nation’s most powerful media
personalities to a national pariah facing the prospect of a
criminal trial.

Just over six months later, though, there was happier news
for the Brookses. Rebekah’s cousin, the surrogate mother, gave
birth to a baby girl, Scarlett, on Jan. 25, 2012.

For News Corp. too, the affair brought about lasting
change. On June 28, 2012, Murdoch announced the company was
being split in two, with the film and television assets being
separated from the scandal-tainted publishing business as 21st
Century Fox Inc.

Despite hacking costs that exceeded $500 million, the
market value of the companies has doubled since before the
scandal, together totaling almost $90 billion.